Because the Degree of Total Leverage Is Multiplicative and Not

question 48

Multiple Choice

Because the degree of total leverage is multiplicative and not additive, when a firm has very high operating leverage it can moderate its total risk by ________.

• A) increasing sales
• B) using a higher level of financial leverage
• C) increasing EBIT
• D) using a lower level of financial leverage

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Definitions:

Fixed Interval

A schedule of reinforcement where a response is rewarded only after a specified amount of time has elapsed.

Variable Interval

A schedule of reinforcement where a response is rewarded after a varying interval of time, making the timing of the reward unpredictable.

Variable-ratio

A schedule of reinforcement where a response is reinforced after an unpredictable number of responses, leading to high and steady rates of response.

Fixed-ratio

A schedule of reinforcement where a response is rewarded only after a specified number of responses.